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First Move with Julia Chatterley
Germany Under to Pressure to Supply Modern Tanks to Ukraine; Electricity Partially Restored in Several Regions; Valliere: Biden Documents are Starting to Worry Democrats; Miller: We Expect 2Q to Show Improvements for China; Hundreds of Standard Tourists Evacuated from Machu Picchu; "Avatar: The Way of Water" Crosses $2B Worldwide. Aired 9-10a ET
Aired January 23, 2023 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
RAHEL SOLOMON, CNN HOST, FIRST MOVE: A warm welcome to "First Move", I'm Rahel Solomon in today for Julia Chatterley. Great to have you with us and
just to head on today's show, combat consent Berlin closer to a decision on sending Leopard battle tanks to Ukraine Poland meantime saying that it
hopes to get tanks to the frontlines soon the latest from Kyiv in just a moment.
Plus, nervous New Year's millions on the move as China ring in the Year of the Rabbit. Amid joyful family reunions, there are also fears about soaring
COVID cases. We'll discuss what all of this means for China's economy with Leland Miller of the China Beige Book and we'll have a live report from
Hong Kong.
Meantime many Asian markets were closed for New Year celebrations Monday and the U.S. though futures currently on track for higher open. Stocks
coming off a broad based rally on Friday, that's all techs, saw more than 2.5 percent hopes for less aggressive Fed rate hikes helping to lift the
market mood.
Your report says that the U.S. Central Bank will raise rates by a less aggressive quarter point at its next meeting. We will discuss with
Washington watcher, Greg Valliere. And speaking of tech software firm Salesforce, take a look rallying and pre-market trading up about 4.5
percent. That's on reports that say hedge fund Elliott Management, is taking a sizable stake in the firm; Elliot said to be demanding reforms.
Salesforce one of the many tech firms that have announced massive job cuts already this year, some 10 percent of its workforce being let go. Spotify
unveiling layoffs today as well. We'll have more on the turmoil in tech later this hour.
But first, Germany still has not decided whether to allow other countries to send German built Leopard 2 tanks to Ukraine. That's despite growing
international pressure. Poland says that it's willing to send them to Kyiv even without Germany's approval, but only if other countries take the same
action.
(BEGIN VIDEO CLIP)
MATEUSZ MORAWIECKI, POLISH PRIME MINISTER: We will apply for such consent, but this is a secondary topic even if we did not get this consent in the
end, as part of a small coalition. If the Germans were not in this coalition, we will still hand over our tanks together with others to
Ukraine not to condition for us at the moment is to build at least such a small coalition of states and on this issue, together with Mr. President
Duda. Mr. Deputy Prime Minister Blaszczak, we are contacting our partners in Western Europe.
(END VIDEO CLIP)
SOLOMON: Meantime Ukrainian President Zelenskyy continuing to urge allies to supply the tanks as soon as possible.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, PRESIDENT OF UKRAINE: This is not time for bargaining, this is the time for survival. We need to survive.
(END VIDEO CLIP)
SOLOMON: Fred Pleitgen is with us now he is live in Kyiv. So Fred, what does Germany want here to move forward to perhaps even send their own
takes? What are they looking for?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're looking for the U.S. to be on board, Rahel. That's one of the things that
the spokesman for the German government actually told me just a couple of minutes ago, I was messaging with him. And he said that they want very
close international cooperation on this topic, especially with the United States.
And it's something that we've heard, really, since last week, when you had that meeting in Ramstein, where all the countries that are giving weapons
to Ukraine, they all came together. And essentially what the Germans are saying is that if the United States gives Abrams main battle tanks to
Ukraine, then the Germans are willing to allow the Leopard 2 main battle tanks to be set.
Now we know of course, that for the time being the U.S. has said that is not going to happen for various reasons. One of them being that the Abrams
is extremely difficult to maintain it has a turbine engine, which is very difficult so guzzles a lot of fuel as well. Essentially, what the Poles are
saying what other countries are saying is they believe that the Leopard 2 is by far the most suitable tank to be sent to Ukraine.
There are a lot of these tanks and a lot of European armies. And if a few European countries give a few tanks each, that Ukraine will already have a
lot of tanks. The Germans again, they're not there at this point in time. They're also saying that they don't actually have any sort of request,
officially from the Poles yet.
But of course, we also heard the Polish Prime Minister, the Germans are also saying, look, they've given a lot of weapons to Ukraine already. In
fact, they're probably the second biggest donor aside from the United States. As far as air defense is concerned, infantry fighting vehicles that
have been OKed now are concerned artillery, for instance, the Germans also giving a lot there as well.
So certainly they do say that they're getting kind of a bad rep here. But of course, the tanks are extremely important to the Ukrainians. And you
know Rahel; we've been dealing with this topic orally over the past couple of days here in Kyiv.
[09:05:00]
PLEITGEN: And there were Senior Ukrainian officials who said this is an absolutely critical issue for the Ukrainians. On the one hand, they're
having a lot of trouble getting spare parts for the Soviet era tanks that they have and ammunitions for those tanks as well. And they also believe
that these modern Western European or European main battle tanks will also just simply help the troops stay alive on the battlefield.
There was one senior official who said they need round about 300 to 400, modern main battle tanks, but they think that number could offset about 2
to 3000 Soviet era tanks. So that's how important this issue is. And it really is a race against time, the Ukrainian say, Rahel.
SOLOMON: It does sound like a critical necessity at this point. Fred, I thought you brought up an interesting point that depending on what side of
this, you know, the Germans have said, we've already done so much. And yet their reputation, at least at this point is that they haven't done enough.
And so I have to wonder moving forward, what's next?
PLEITGEN: Yes, I mean, first of all, you're absolutely right, the Germans certainly are getting pretty bad rep in all of this. They're also not
really doing themselves any favors in the communication that they're conducting. They certainly have given a lot of very important modern
weapons that are in use here.
If you look at for instance, the air defense around Kyiv, a lot of that is German technology. If you look at the defense against drones as well, the
Germans gave the Ukrainians some extremely effective weapons. You look at multiple rocket launching systems, the high Mars type weapons that we've
been talking about.
Germany is one of only three countries that have actually given that. But right now, the main issue is really the main battle tanks and the
importance of those. And the Ukrainians really believe that if they want to take back a lot of their territory, if they want to really get by the next
couple of months on the battlefield, that's an absolutely critical issue.
They see that they need to not have main battle tanks. And they're counting on especially European nations to give those Leopard battle tanks because
they simply say that, as far as the engine is concerned, the diesel engine, it's a lot easier for them to get used to that as far as spare parts are
concerned. There's a lot of that in Europe as well. So this is definitely an issue that for the Germans and for the Europeans is not going away and
certainly will continue to become more pressing, Rahel.
SOLOMON: A critical issue at what appears to be a critical time in the war. Fred Pleitgen in Kyiv for us thank you. Turning to the U.S. and California
where officials are searching for a motive. Police there are investigating why an attacker opened fire killing 10 people and injuring 10 others at a
dance studio.
It happened Saturday night in the City of Monterey Park which has a majority Asian population. The gunman then went to a second dance studio
but people there were able to wrestle his gun away from him. One of those men spoke to ABC.
(BEGIN VIDEO CLIP)
BRANDON TSAY, SAYS HE DISARMED GUNMAN WHO KILLED 10: I needed to get the weapon away from him. I needed to take this weapon, disarm him or else,
everybody will die. When I got the courage, I lunged at him with both my hands, grab the weapon and we had it struggle. We struggled into the lobby,
trying to get this gun away from each other.
He was hitting me across the face, especially in the back of my head. I was trying to use my elbows to separate the gun away from him, creating some
distance. Finally, at one point I was able to pull the gun away from him, shove him aside, and create some distance. Point the gun at him, intimidate
him shot him and say, get the hell out here. I'll shoot, get away, go.
(END VIDEO CLIP)
SOLOMON: And Police say the suspect age 77, 72 rather who you're seeing on your screen there was found dead from a self-inflicted gunshot wound after
a standoff with officers, Kyung Lah has the details.
(BEGIN VIDEOTAPE)
REP. JUDY CHU (R-CA): What I want to do here is to say to the community feel safe. You are no longer in danger.
KYUNG LAH, CNN SENIOR U.S. NATIONAL CORRESPONDENT (voice over): The Monterey Park shooting suspect is dead from a self-inflicted gunshot wound
following a police standoff Sunday. Law enforcement track a white cargo van that fit the description of a vehicle of interest from the shooting for our
SWAT officers tried to get the occupant of the vehicle to surrender until what officers believe was a gunshot heard from inside the vehicle.
ROBERT G. LUNA, LOS ANGELES COUNTY SHERIFF: Homicide detectives are working around the clock gathering additional information and working on
determining the motive behind this extremely tragic event.
LAH (voice over): Law enforcement sources tell CNN the suspect may have sought medical treatment shortly before the standoff.
UNIDENTIFIED MALE: This is unbelievable. This is terrible.
UNIDENTIFIED MALE: To see this happen in this place is shattering.
LAH (voice over): The 72-year-old alleged shooter opened fire at a dance studio where the city's large Asian American community was celebrating the
Lunar New Year Saturday night.
UNIDENTIFIED FEMALE: Additional units requested, multiple victims, gunshot wound.
LAH (voice over): The gunman then left the scene and targeted another neighboring dance studio with a semi-automatic weapon before it was
wrestled away from him.
[09:10:00]
LUNA: The suspect went to the Alhambra location after he conducted the shooting and he was disarmed by two community members who I consider to be
heroes because they saved lives.
LAH (voice over): The alleged shooter is Asian American and believed to have acted alone. He was a regular patron of the Star Ballroom Dance
Studio, even meeting his ex-wife there, according to three people who knew him.
HENRY LO, MONTEREY PARK MAYOR: I have confidence that we will get over this crisis because we must, and we will only do so if we do it together as a
community.
LAH (voice over): 10 people were pronounced dead at the scene, making this mass shooting the deadliest since the Uvalde Elementary School shooting
last May. The Sheriff described many of the victims as likely being in their 50s, 60s or older. This tragedy marks the 33rd mass shooting so far
this year, according to the gun violence archive.
LUNA: Gun violence needs to stop and I hope that this tragedy doesn't just go on a long list of many others that we don't even talk about until the
next one comes up.
(END VIDEOTAPE)
SOLOMON: And Kyung Lah joins us now from Monterey Park, California. count still so many questions as we said authorities still don't have a motive.
What's next for investigators here?
LAH: And that's really where they're going to start, Rahel. They're going to look at what is the motivation here most curious about this is that we
are talking about an older gunman 72-years-old who yes had some connection to these particular dance halls with his ex-wife according to multiple
people who CNN has spoken with.
But the question is, is what would have pushed him to try to get an illegal gun to walk into this place, and then to murder so many people? So that is
where law enforcement is going to begin with that motive and then with where that gun came from, was it purchased and then altered or how was it
obtained so a lot of work on the law enforcement - Rahel.
SOLOMON: Kyung Lah, great to have you thank you. Well, electricity is slowly being restored across Pakistan after a major breakdown in the
national grid left 220 million people without power. Sophia Saifi is in Islamabad, one of the cities that has had a limited number of grids
restored. Sophia, help me understand do we know what caused this national outage and how soon before power is more fully restored across the nation?
SOPHIA SAIFI, CNN PRODUCER: Rahel, we haven't really been given an exact understanding of what has caused this outage. It happened early morning
around 7:34 local time. We're coming into 12 hours since the outage has taken place. And usually the Minister of Energy from the street actually
addressed the country explaining that there have been setbacks when they were trying to get the power back up.
Some parts of the country have had power, but I'm in the capital City of Islamabad. And right behind me there is just absolute darkness. We've been
getting reports from hospitals, which have been running on generators for about 12 hours that even extra machines are proving to be difficult to use.
We're hearing from telecom authorities and companies that they're having massive issues, making sure with their tech teams that the phone coms
across the country are up and running. We've also been told that various gas stations across the country are not working because of the fact that
the generators that are making them operate are out of fuel lines at gas stations, a complete breakdown across the country.
It's very, very cold here in Pakistan is the dead of the wet if the dead of winter. We do know that some parts of the country have firewall we've been
told by the Minister of Energy that it's going to come back late at night. We're coming up to 12 hours, like I said earlier, so we're just going to
have to wait and see how long this cold night is going to be, Rahel.
SOLOMON: And Sophia, I'm glad you pointed out that the hospitals are using generators because initially that's where my mind went. How are the
hospitals and critical services managing? Sophia, if you might, as you said, you're in Islamabad, it's completely dark behind you. I cannot even
make out. Are you in front of a city center? I mean, what is behind you just to paint a picture for people at home, because when I'm looking at you
it's complete darkness?
SAIFI: Yes, I mean, we are standing in a building and right behind me there's a residential area. And if you can look all the way back you can
actually see glimpses of this twin city of Pakistan Rawalpindi. This is a massively populated part of the country. It's the heart of the country in
terms of it being the capital, and you can't see loads and loads of homes and buildings behind me which are usually lit up, which is why we stand
where we usually stand to do these lives, but at the moment, it's pitch dark, Rahel.
SOLOMON: Just incredible. Sophia Saifi thank you live for us in Islamabad, Pakistan.
[09:15:00]
SOLOMON: Well, a prominent scientist in the Chinese government says that about 80 percent of the country has been infected with COVID-19. This has
more than 2 billion trips are taken for the 40-day Lunar New Year season following the end of zero COVID restrictions.
Marc Stewart joins me now. So Marc, look, I mean, this is the same official who also said in the next two to three months, the possibility of a large
scale COVID-19 rebound, or a second wave of infections across the country is very small. What can you tell us about the reaction to these comments?
MARC STEWART, CNN CORRESPONDENT: Well Rahel, I think you're raising a very important question. Whenever we get a piece of data or hear a statement
from someone affiliated with the Chinese government, it is met with skepticism, it is met with a critical eye. The reason being has history.
It was just in December that we had some reports that perhaps COVID had already peaked in China. It was just a few weeks ago, we were discussing
this data point of 37 deaths from COVID. And then suddenly, we saw a sharp rise to 60,000 deaths. So that is why there is a lot of hesitation to take
this with 100 percent credibility.
What is certain though, right now is that people in Mainland, China are on the move after being under lockdown. For several years, this Lunar holiday,
really is a central event in China. It's seen as this mass migration of people and we are seeing that trains stations are busy, airports are busy.
We've seen a lot of people driving, boats, ferries; they're all carrying passengers, which is again leading into this concern, the narrative will
COVID spread. If you are in a city center, such as Beijing, Shenzhen, Guangzhou, or Beijing, for that matter you are very close to strong and
sophisticated medical care.
But as people see their families in other parts of the country where maybe that infrastructure just isn't there is concerned, this holiday It started
about two weeks ago, it will run for about two more weeks, Rahel. And the narrative as far as the number of COVID cases is still very much to be --.
SOLOMON: Very interesting and Marc, we know this is also a huge time, of course for families the Year of the Rabbit as I've come to learn, but
hopefully also an economic boost for a country that desperately needs it.
STEWART: An economic boost certainly for Mainland, China. As we mentioned, people have been under lockdown for about two years. People couldn't
necessarily shop as they had used to. It was just a few weeks ago, I was talking to the Chief Financial Officer of - beauty, a major makeup,
skincare, distributor, retailer in Asia. He saw a big dip because of the lock downs in China. So he is anticipating hopefully a return to stronger
business and many companies and firms across Asia certainly feel the same.
SOLOMON: Well as the world reopens and as China reopens cosmetic sales usually follow, as we have seen here in the U.S. in the West. Marc Stewart,
good to see you thank you. Well, straight ahead, democrat's dilemma the Biden classified document mess coming up what could be the worst time for
the party as it gears up for next year's elections.
A top Washington watcher discusses how the President might be hurt politically? And the sad song at Spotify, the streaming giants is the
latest global tech firm to announce layoffs but how deep will industry job cuts go? We'll discuss later in the program. We'll be right back.
(COMMERCIAL BREAK)
[09:20:00]
SOLOMON: Welcome back to "First Move", the President Biden classified document trauma, the debt ceiling debate and hopes for a Fed rate hike
downsize. Let's call them the three Ds all are sure to be major topics of discussion in Washington this week. And the Biden document mess the FBI
discovering an additional batch of classified papers at the President's Delaware home on Friday.
All of this making Democrats increasingly uneasy about the political damage to Biden, as he goes up to announce his reelection plans. Greg Valliere, he
joins me now he is the Chief U.S. Policy Strategist at AGF investments and joins me now. Greg, good to see you again!
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: Nice to see you Rahel.
SOLOMON: So even more documents discovered this week. And you said to your note this morning that President Biden is "increasingly viewed as tone
deaf" about the seriousness of his handling of documents. Greg, what implications if any, do you think this latest batch of documents will cause
for the President?
VALLIERE: Well, I think it's beginning to worry Democrats about the next election. Joe Biden, on many issues tends to be tone deaf withdrawn from
Afghanistan was a prime example. And now he's just sort of brushes off these documents. Well, it seems like we have new documents uncovered every
couple of days that is not hurting; it's not helping the party at all.
SOLOMON: So what Democrats like to see at this point? I mean, absent no new discoveries, what would the President need to do? Do you think to shore up
some support from Democrats who have become increasingly frustrated?
VALLIERE: Well, I think the simplest thing Rahel, is for him to say it was a mistake. I was sloppy, I was careless, I'm sorry, won't happen again.
Let's move on. Yet he's stonewalled on a very simple, you know, act of contrition. And a lot of Democrats I've talked to are dismayed to see the
self-inflicted wounds here by Biden, in not wrapping the story up.
SOLOMON: Turning to the debt ceiling Greg, do you think President Biden has been very clear, the White House has been very clear that at least at this
point, they have no plans to negotiate with new house speaker Kevin McCarthy? Do you think that's the right strategy politically? Or do you
think it comes across as unwilling to compromise?
VALLIERE: Well, it could be the latter. The Republicans are having a field day saying, you know, we at least have to negotiate. I understand the
argument from the President in Janet Yellen and others say we're not going to negotiate with terrorists. We're not going to yield to any of these
demands. But you talk to people on Capitol Hill, and I think that overwhelmingly, they believe, eventually there will have to be
negotiations.
SOLOMON: I see and then also looking ahead to 2024, which is hard to believe that at this point that is next year, but I caught myself this
morning that yes, in fact, we are in 2023. You know, it does appear that the contenders for the Republican Party appear pretty clear.
I mean, Mike Pompeo, Nikki Haley, of course, Ron DeSantis. Do you think if the President doesn't actually step down or doesn't say that he doesn't
intend to run again, but anyone in the Democratic Party would dare throw their name in the hat?
VALLIERE: Well, you know, it's not out of the question that one or two Democrats, maybe not a top tier Democrat, would run in the primaries just
to give Biden a de facto challenge can't totally rule it out. I think the bigger issue is will a group of Democrats who are pro Biden go to the
President and say, look; you've got to get out of this document thing? It's hurting you; you've got to just say I'm sorry and move on.
SOLOMON: I see, but turning back to some of those names. Who do you think might be some names? If we were to see democratic contenders who were
talking about?
[09:25:00]
VALLIERE: Well, let's say Joe Biden announces after the state to the Union Address on February 7 that he's not going to run. I think he probably will
but let's say he says I'm not running. Well, then I think obviously Kamala Harris would be on the shortlist.
But you'd have Elizabeth Warren, maybe Bernie Sanders, Pete Buttigieg, Amy Klobuchar. And then a ton of Governor's headed by Gavin Newsom, Gretchen
Whitmer of Michigan and Phil Murphy of New Jersey. So there could be as many as a dozen Democrats running if Biden chooses not to run.
SOLOMON: Do you think, you know coming off of what I think the Biden administration for sure would say, would be several legislative win sort of
managing through inflation? I mean, what do you think is the biggest thing hurting a Biden reelection bid?
VALLIERE: I think an awful lot of Americans are still not convinced the economy has turned around. It's possible after all these Fed rate hikes,
even though they're going down to 25 now, but after all of these hikes, it's entirely possible by the second half of this year, the economy could
look softer. I think that's still is the big wildcard for the President.
SOLOMON: And Greg, you teach me up perfectly for how I want to end here the rate hikes right. We have the Fed meeting again next week, as you said, the
expectation is they will now raise rates 25 basis points, which is something we haven't seen since the very beginning of the rate hiking
cycle. Is it too soon, though, to start talking about a pause?
VALLIERE: For the Fed it is. I think the Fed is very frustrated that the markets are convinced there could even be a rate cut by the end of this
year. The Fed isn't remotely thinking about that. But we do go to 25 and the real issue is do they pause in the next meeting? That would be a clear
sign that we're about finished with the rate hikes but rate cuts, I just don't see them anytime soon.
SOLOMON: It is perhaps one of the biggest sources of disagreement these days in the markets. Will we see a rate hike and 2023 or won't we? I guess
it depends who you ask. Greg Valliere, thank you, he is Chief U.S. Policy Strategist at AGF investments. And after the break, we return to China a
country on the moon celebrating the Lunar New Year, but will a spike in COVID infections impact the country's new effort to return to normal, we'll
discuss.
(COMMERCIAL BREAK)
[09:30:00]
SOLOMON: Welcome back! And let's get back to China, and reassurances that the chances of a major COVID rebound there are small. That's because 80
percent of the population has already been infected, at least according to a top government scientists.
And yet there are fears that the annual mass migration for the Lunar New Year holiday will drive up infection numbers. So where does all of this
lead the country's economic recovery? Well, Leland Miller, he is the CEO of the Independent Economic Data Platform, China Beige Book Leland, good to
have you on the program again.
LELAND MILLER, CEO, CHINA BEIGE BOOK: Thanks for having me.
SOLOMON: So how does 80 percent square to you? I mean, it only feels like it was early December where the nation reopened, you have a nation of 1.4
billion people. And so to see a level of exposure, so high, so quickly, does that square - does that seem about right to you?
MILLER: Well look, all the numbers are guessing, including this 80 percent figure. And we do know that COVID is sweeping the country at a remarkable
and unprecedented pace. We know everyone's going to get infected; we just don't know what the pace is right now.
So I think it's interesting that the government narrative has turned from this COVID Zero, no one's going to get it, no one has it too. Now look,
everyone has it already and we're about to get past this. I think the truth is, maybe not the middle. But it's not quite that we're past, you know,
this COVID wave yet.
China's big the big cities were hit first, it's going to take a while for it to, you know, all of China, the rural areas, et cetera, to get infected.
So this is a longer process, and I think people are making it out to be if you just look at, you know, big city dynamics.
SOLOMON: Yes, I think that's an interesting point, right, that the narrative appears to be one from zero COVID to suddenly, you know, we've
gone through the exposure, nothing to see here, we will be just fine. Leland, how challenging is it with some of the concerns about transparency
to accurately forecast what an economic recovery will look like?
MILLER: Well, I think this is why it's so important to be looking at the data. And you know there will be an economic recovery in 2023. In 2021,
there wasn't 22, there wasn't 2023, there will be partly because the 22 numbers were so bad.
But as you're coming out of COVID, zero, you know, you will have firms start to invest in higher and borrow finally. You will have consumers do
some level of revenge bending. And so you're going to have a bounce in the data.
The question is how much government policy support is there on top of this? You know, the way you track this is you look at the dynamics of what's
happening in the corporate community? If they are optimistic that things are getting better than they will hire more, they will borrow more, they
will invest more. And these are things we track. And we're going to be watching very, very closely as we get into March and April, in particular.
SOLOMON: And I take your point that there will be a recovery, but I think you're touching on it there March, April, is that when you start to really
expect to see it in the data, because you could also argue that at least from just some of the sentiment, it appears that many expected the recovery
to be very fast, very furious. And I wonder if that's too premature?
MILLER: That's absolutely too premature. I mean, the first thing we said back in, you know, late November, early December, when they did the COVID,
you know, flip rip the band aid off, policy change said look, it's not smart to call this a reopening, because China's not reopening.
What's happening is COVID, zero is being pulled back, and the entire economy is going to be shut down because everyone's going to get COVID or
they're going to be hiding from people who have COVID. So this is not something that's going to turn back on immediately.
I know everyone likes to look at these you know, Beijing subway indicators, they say, oh, look, the past, you know, the worst is past. But look, this
is going to take a long time, even at this speed to push through China. You're not going to have a recovery in January; although you'll see certain
sectors like travel start to get better of course.
You're not going to have a recovery in February. March is really the earliest that we expect there to be any type of recovery, which means the
first quarter is not going to be good. You know, the bull case, I think for China starts in the second quarter.
SOLOMON: And then I wonder how prolonged the recovery will be Leland? And - me for a moment I don't know if you remember a few years ago, when all of
us here in the U.S. were talking about well, our recovery is a K-shaped recovery or a V-shaped recovery or U-shaped recovery. And I wonder looking
ahead to China what you see in terms of how prolonged this recovery will be and what it looks like?
MILLER: If everything goes right, so firms start to reinvest consumers start to spared and you'd get a modest amount of stimulus better sentiments
et cetera. You could see a pop from tip for 2, 3 and 4 quarters even. But the problem here is this is going to be a head fake for longer term
investors because you aren't going to see the cyclical bounce back, but it's happening with - in the context of a long term structural slowdown.
[09:35:00]
MILLER: So you have all the pieces here to have a very nice recovery in 2023. But that's not going to change the longer term dynamics, which is a
much lower Chinese economy property much diminished as a core growth driver, consumers that just don't want to spend. So you're going to see it
up, but you're going to see it down afterwards.
SOLOMON: How much do we expect Leland for the Chinese consumer to benefit some of the other major economies? How much of that do we expect to be a
benefit to other major economic drivers?
MILLER: Yes, I think the story is totally oversold. You know, there may be some travel that goes beyond China, into Asia, you know, even into North
America and Europe. And so you see some temporary boost from tourism. But look at the Chinese consumer it isn't going to save the world.
I know, people like to look at China's potentially larger GDP this year and say, well, the GDP share will be higher. And so China will save you know,
be the new world's growth engine. China has gotten big by producing by exporting by stealing demand from other countries having very low imports
very low domestic consumption.
So the dynamics are here for the Chinese consumer to rebound inside China. But that doesn't mean they're going to save the world economy. They're just
not consuming enough from the rest of the world.
SOLOMON: It's a great point. And Leland we'll have to leave it here. But before I let you go, what's the biggest risk do you think to China's
economic growth in 2023 or the recovery?
MILLER: Well, certainly, it'd be a second COVID wave. We're still a long time from having to talk about that as an immediate factor. The second
thing is not getting enough of policy support. You're going to get a little bit at the beginning. But people are expecting a return to the old ways or
at least a lot more. If they don't get it particularly second half of the year you're going to see growth fall much faster than people expect.
SOLOMON: A lot more to watch here. Leland Miller, thank you. He is the CEO of China Beige Book. Good to have you. And coming up, protest in Peru take
a hit at the tourism dollar with widespread disruption from airports to Machu Picchu, we'll be right back.
(COMMERCIAL BREAK)
SOLOMON: Welcome back! Nearly 11 months into the war in Ukraine a senior Ukrainian official in the East says moving forward is "Very difficult".
Meanwhile, group of volunteers is trying to help civilians near the frontlines in Eastern Ukraine. Ben Wedeman reports.
[09:40:00]
(BEGIN VIDEOTAPE)
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Down a well-trodden path on a totally heads toward home perhaps for the last time.
Sasha a travel agent turned volunteers will help him collect what he can for the journey to Kyiv. It's time to be with family.
I want to see my grandchildren I have four he says and my son just got drafted. Neighbors will look after his chickens, goats and dog that's all
he says. Let's go guys. They'll start shelling now. He's leaving with a group of young Ukrainians who deliver food and supplies to soldiers,
frontline communities and evacuate those who wants to leave.
They had close calls up plenty, says Sasha in Bakhmut cluster bombs fell all around us with duct. God protected us. A year ago Oleksandr managed car
parks toll.
OLEKSANDR VETROV, UKRAINIAN VOLUNTEER: And when the war started since February 2022, we come together and take one bus and together some foods,
some stuffs and make our visits to hot points.
WEDEMAN (voice over): And hot these points are. The adventure through villages still under fire, ravaged by months of shelling they've come to
this village looking for people they heard reports that 27 were still here so far though they haven't found any.
Finally, they find a door marked - people have been hiding in the shelter. Volunteers quickly get to work no time to waste. We're always in the
basement says Fitlana (ph) we go there as soon as they start shelling, especially the last days it's very, very hard. Olha (ph) own to cafe near
Kyiv, but left it to be here. She prefers to keep her mother in the dark.
I don't always tell her where I go because she's worried for my life she says, but we go anyway. In another village they're evacuating Stefan who's
suffering from frostbite or so he believes he hasn't seen a doctor. I was putting up with the pain but now it hurts when I walk and I can't get any
treatment here he says.
There are no doctors, no hospital so I asked my daughter in Holland to help me. In the evening his daughter - meets him outside hospital nearby
Slavyansk. The relief says it all Ben Wedeman CNN, Eastern Ukraine.
(END VIDEOTAPE)
SOLOMON: Meantime in Peru anti-government protests there are causing travel chaos from airports to hiking trails. Hundreds of strands of tourists have
now been evacuated from Machu Picchu after access to the world's famous site was suspended. CNN's Rafael Romo reports.
(BEGIN VIDEOTAPE)
RAFAEL ROMO, SENIOR LATIN AMERICAN AFFAIRS EDITOR (voice over): Peru's biggest tourist attraction Machu Picchu one of the Seven Wonders of the
World and now a vacation nightmare. Peru announced Saturday it's closing the fame site indefinitely, including the Inca trail that leads up to it.
Anti-government protests have choked transportation to and from the ancient citadel stranding people at the remote location. Rail operators say they've
had to suspend services because several tracks have been blocked or damaged by protests that have spread throughout the country. These tourists in
Machu Picchu are signing a petition to ask the railroad company to evacuate them saying they've been left hanging not knowing how or when they can
leave?
ALEM LOPEZ RABINA, TOURIST: We're uncertain as to whether a train is going to come and pick us up. As you can see all the tourists are queuing up
here. Signatures are being taken in order to register to be evacuated.
ROMO (voice over): In the past month, dozens of people have been killed in violent clashes. The fiery protests erupting after the ousting of Former
President Pedro Castillo in December, demonstrators are demanding new elections and calling for the resignation of Peruvian President Dina
Boluarte.
The civil unrest has stranded tourists before last month authorities evacuated hundreds of people after similar transit issues at Machu Picchu.
Officials say this time around some tourists have left by foot but the trek is at least six to seven hours long.
[09:45:00]
ROMO (voice over): Machu Picchu usually draws more than a million tourists a year but it's now off limits; Peru's National Treasure overshadowed by
its spiraling political crisis, Rafael Romo, CNN.
(END VIDEOTAPE)
SOLOMON: And still to come, Spotify cutting costs by cutting some workers loose, we'll have more after the break.
(COMMERCIAL BREAK)
SOLOMON: Welcome back to "First Move"! The opening bell sounding on Wall Street just about 15 minutes ago for the first time this week let's take a
look at the markets you can see mostly higher. The DOW is up fractionally but the NASDAQ up almost eight tenths of 1 percent. that's a nice bounce
for Monday morning and the S&P up not quite half a percent let's call it four tenths of a percent.
So volatile early trading season though. Tech meantime coming off a winning week but volatility in the broader market amid a mixed start to corporate
earnings season Q4 results will be coming in fast and furious in the days ahead.
Microsoft and Tesla just two of the big firms set to report. We also get some closely watched economic numbers they're also on the way the U.S. is
out with its first look at how the economy did in the fourth quarter on Thursday.
Meantime, Bitcoin 2023 bounce so that keeps continuing the Crypto currency briefly rising above $23,000 per Bitcoin earlier today its now closer to
about 22,764 but still its highest level in months Bitcoin now up more than 35 percent in January.
And 2022 may have been a brutal year for U.S. markets. But one hedge fund had a banner year the firm is Citadel, which was founded by Ken Griffin
made $16 billion for its investors last year. That is the largest annual gain ever made by a hedge fund according to research by LCH Investments.
Paula R. LA Monica joins me now. So Paul, what's behind this and how does this really stack up to the broader industry? Because we know the broader
hedge fund industry didn't necessarily all have such a great year. So put this in context for us.
PAULA R. LA. MONICA, CNN REPORTER: Yes, exactly. Citadel and other large hedge funds Rahel really stood out in what was a very difficult year for
most investors that $16 billion profit smashing the previous record of the "Greatest trade ever", you know, Paulson and his hedge fund making a bet
against subprime mortgages in 2007.
But again, what was interesting here was that it's a diversified strategy at Citadel. They didn't make like one big bet that really panned out. But
to your point, hedge funds writ large lost more than $200 billion collectively in 2022. So it was not an easy year to make money. You got
give kudos to Citadel for having a record profit in an awful year for the markets.
[09:50:00]
SOLOMON: And one thing that helped with that Paul was just the staggering amount of money they made on fees by my check $12 billion. I mean, what
does that signal to you?
MONICA: Yes, I think that for top hedge funds, and there are only handfuls, I think of hedge funds with the reputation of Citadel. They can command
these monstrous, some might say, obscene fees, because they have the track record.
And that's really what it's about Rahel, if you can prove to investor's year in year out that you're going to make money, and then you can get
these fees that people will pay. But one misstep, and then all of a sudden your credibility is shot. So it's a risky strategy to rely on these giant
fees, because you have to keep performing to justify why you want people to spend that much money to manage their money.
SOLOMON: Yes, it's a great point. If you're going to command such a hefty fee or have hefty price, then it better be worth it. Paul, Microsoft making
some news announcing that it is making a pretty hefty investment and open AI, which includes the very popular but also controversial chat GPT. What
can you tell us?
MONICA: Yes, Microsoft just announcing that it is making a very big investment. It's third, I believe Rahel in the company. There are reports
that we have not yet confirmed suggesting that this is a multibillion dollar investment. I think it really just goes to show that right now, AI
is a hot trend in tech. You're going to see other big companies like Alphabet of course, and probably Meta invest even more in AI going forward.
You know, the question is, will CHATGPT, which seemingly is doing a good job of writing things that look like it was written by a human instead of a
bot. You know, that's going to be I think, very interesting to see how corporate leaders you saw a lot of CEOs at Davos praise CHATGPT, are we
going to see more communications done via these artificial intelligence solutions and less from lowly scribes such as yours truly?
SOLOMON: Well, you know, Paul, I watched a segment over the weekend here on CNN, where the anchor rattle holes sort of intro that was written by
CHATGPT. And I have to admit, I was a little concerned. Maybe we should all be.
MONICA: The technology has gotten a lot better. I will admit that. Yes.
SOLOMON: Paula R. LA. Monica thank you. Your work is invaluable. I'll just say that. And another tech company cutting its headcount to cut costs
Spotify said Monday that it will cut 6 percent of its global workforce, joining the likes of Amazon and Microsoft, which have announced cuts in
recent weeks as well.
In a letter to employees the company's CEO called the cuts "Difficult, but necessary". Clare Duffy joins me now. Clare, you know, as you know, every
week it seems you can even argue sometimes every day, it seems like we're getting another announcement from a tech company announcing job cuts.
Dan Ives, a popular analyst at Wedbush said in a note Friday, more tech layoffs will be a theme during earnings season. So you've written about
this very phenomenon. What more can you tell us? What more contexts can you add here?
CLARE DUFFY, CNN TECH WRITER: That's right Rahel. I mean, in addition to these Spotify layoffs, you have Amazon, Meta, Google, and Microsoft has all
announced that they're collectively cutting 50,000 employees over the last three months.
This is a really major reversal from just two years ago, when these companies were adding rapidly to their headcount because of this pandemic
growth, that they saw huge demand for their products. And I think what we're seeing now is that these companies sort of misjudged how much that
growth was going to continue.
You now have high interest rates, high inflation, recession fears affecting consumer demand and advertiser demand. And so these companies kind of have
to pull back their ambitions that had been sort of driven by this massive pandemic growth.
I think the Spotify CEO in his letter this morning really captured it, he said, I had hoped to contain the strong tailwinds from the pandemic. In
hindsight, I was too ambitious in investing ahead of our revenue growth.
SOLOMON: Clare Duffy, we will leave it here. Thank you. And you can read her article "How Big Tech's Pandemic Bubble Burst on cnn.com. And finally,
James Cameron made film history again over the weekend.
His film "Avatar: The Way of Water" has now made more than $2 billion at the box office worldwide. The blockbuster total is after it enjoyed the
sixth straight weekend at number one in theaters around the world.
You might remember the first Avatar well that still remains at the top of the list of biggest selling films of all time, coming in at just under $3
billion worldwide. Cameron plans to release at least three more films in the Avatar franchise. Three more chances to join the $2 billion club.
[09:55:00]
SOLOMON: And if we might we can pull up the markets again just get a quick check on the markets before we leave you for the day. Last I checked
markets were solidly higher on this last day of the - first day of the week make that. DOW Jones up little less than a quarter of a percent the NASDAQ
now accelerating those gains up almost 1 percent and the S&P is up half a percent.
It is - we are in the middle of earnings season and tech earnings season rolls on this week, so much more to come. And that is it for the show. I'm
Rahel Solomon "Connect the World" is coming up next.
(COMMERCIAL BREAK)
END
